On 17 December 2014  EU legislators finally reached an agreement on key terms for the proposed Regulation on Interchange Fees for card-based payment transactions.  The Commission originally proposed the legislation in July 2013 but it has taken considerable time for the various EU governments and the European Parliament to agree on the detail.  Whilst the Regulation still needs to be formally approved by the European Parliament and Council, this is considered to be a formality and is expected to happen in  2015. It is possible that we will see some delay if the Regulation is to run in parallel with the new Payment Services Directive which has yet to be agreed.

Rates cap

It was agreed that cross-border debit card transactions will be capped at 0.2% of the transaction value and, for a period of 5 years and for domestic transactions only, member states can apply the cap of 0.2% to the “annual weighted average transaction value” of all domestic transactions within the card scheme.  After the initial 5 year period, the cap on domestic interchange rates will either be 0.2% of the transaction value or set at a fixed rate (which will be no more than five cents per transaction).  Credit card transactions  will be capped at 0.3% of the transaction value for both cross-border and domestic transactions. The caps will take effect six months after the legislation enters into force.

The caps will not apply to commercial cards.

Three-Party Card Schemes

The new rules will not apply to so-called “three-party card schemes” (such as Diners and American Express) providing the card is both “issued and processed” within the same scheme.  However, in three years’ time the new rules will apply to three-party schemes where they licence other parties to issue cards.

Honour all cards

The new rules will break the honour all cards rule and retailers will be free to choose which cards to accept.


The Commission has welcomed the news, with the EU competition commissioner (Margrethe Vestager) stating that: “This legislation is good for consumers, good for business, and good for Europe. It will lead to lower prices and visibility of costs for consumers. It reduces a ‘tax’ levied on business by banks in the form of interchange fees, and releases the brakes that have so far held back innovation”. This view is not however shared by all stakeholders and the industry will no doubt review the drafting in detail to interpret and understand its full impact once it is released.